Property & Construction Daily

The Property & Construction Daily provides a sector-specific comment from leading analyst Alastair Stewart. His daily perspective provides a round-up of market statements, news, economics and views from the property and construction sectors.

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May 22, 2024

VANL, MRL, BLND, ESP | Economy – House prices grow 1.8% Y/Y, ONS | News – Labour unveils new town plans

Company news

Van Elle Holdings (VANL, 38p, £40m mkt cap)

Specialist ground engineering contractor. FY (Apr) 24 trading update. Guidance: “Group revenue for the year is expected to be £140m, approximately 6% below the previous year including five months contribution from the acquisition of Rock & Alluvium, or 12% lower on a like-for-like basis. This is in line with expectations and reflects the impact of prevailing market conditions, with the housing and infrastructure sectors being impacted by lower levels of demand and delays”. Net cash, £5.5m (FY 23£7.5m) “reflecting increased investment in the year”.

Outlook: Orders +19%, £36.8m. “Both the housing and infrastructure sectors are
widely expected to recover in the near term, and whilst timing remains uncertain, the group will benefit from
increased volumes. Van Elle is also developing a strong position in the water and energy sectors, which are
both expected to contribute materially to activity levels from FY 26 and beyond. The group will commence its
first major energy transmission scheme in FY 25 with further tender opportunities expected this year and is
designing modular foundation solutions for several customers ahead of AMP8 in the water sector. The Board
remains conservative on the timing of a full recovery in the housing sector but is seeing early signs of progress
with order intake and rig utilisation increasing over the last three months.

In Canada, the group has continued
to develop a strong position ahead of significant rail infrastructure opportunities including its appointment as
a strategic partner within the Toronto region expansion programme. The group has identified a range of
further cost saving measures, consisting of headcount reductions and efficiency projects, with targeted
annualised savings in excess of £1m. The group’s funding facility of £11.0m is unused, providing significant
liquidity headroom. The Board continues to appraise new M&A opportunities in core and adjacent markets”.

British Land Company (BLND, 395p, £3,662m)

Leading UK commercial property investment, development and services group. FY (Mar) results. U-lying PBT
+1.5%, £269m; stat PBT, £15m (FY 23, loss, £1,034m) u-lying EPS +1%, 28.5p; divs +1%, 22.8p; EPRA TNAVPS,
562p; portfolio valuation, £8,684m (£8,898m); LTV, 37.3% (36.0%).

Trading: “We outperformed the MSCI
benchmark by 300 basis points and values were stable in the second half”. ERV growth: 5.9%: Campuses,
5.4%, Retail Parks, 7.2%; London Urban Logistics. 10.0%. Portfolio occupancy, 97%: Campuses, 96%; Retail
Parks, 99%; London Urban Logistics, 100%.

Capital activity – Disposal proceeds in FY24 of £410m, 11% above
book value on average; sale of 50% stake in Meadowhall Shopping Centre to Norges for £360m, expected to
complete in July 2024; acquisition of Westwood Retail Park, Thanet for £55m at a net initial yield of 8.1%.
Outlook: FY 25 ERV guidance, 3-5% growth in each market. Comfortable with market expectations for FY 25 ulying EPS, 27.9p. “We expect committed and recently completed developments to deliver 4.5p of EPS, of which
2.6p will be in FY 26. Although the geopolitical and economic landscape remains uncertain, with a portfolio net
equivalent yield over 6%, 3-5% forecast rental growth and development upside, we expect to generate
attractive future returns.”.


Empiric Student Property (ESP, 92p, £555m)

Fund owning and operating UK student accommodation. Business and trading update. Guidance: “Revenue
occupancy for academic year 2024/25 underpins confidence that our portfolio will again be effectively full for
a third consecutive year. Like for like growth in average weekly rents to exceed 6% for academic year 2024/25
he booking cycle for the new 2024/25 academic year continues to demonstrate the resilience of demand for
our high quality purpose-built student accommodation offer, providing confidence in the continued delivery of
strong occupancy and rental growth into 2025 and beyond. The business is poised for growth. We’re
progressing schemes through the planning process and continue to make good progress with potential JV

Economic data

House prices. UK house prices rose by 1.8% to £283k in the year to March 2024, compared with a fall of 0.2%
in the 12 months to February 2024, according to the ONS. On a non-seasonally adjusted basis, average house
prices in the UK increased by 0.7% between February 2024 and March 2024, compared with a decrease of
1.2% during the same period a year earlier (February and March 2023).

Viewpoint: ONS is the most
comprehensive measure of house prices, but has lagged the Halifax etc, since data is based on completed
purchases. A possibly stronger than expected increase.

In other news …

Politics. Angela Rayner has announced that sites for new “towns of the future” will be unveiled by the end of a Labour government’s first year in power, BBC. Labour’s deputy leader and shadow housing secretary said creating new towns was a key part of her party’s plan to build 1.5 million homes over five years. Ms Rayner hopes the private sector will be persuaded to fund the new towns, which will have to include 40% affordable housing.

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